Why the HR department is redundant at the hands of the millennials

The social era is making the workplace a jungle for digital natives to exercise their right to input, feedback and collaboration. Mark Wade contemplates the future of the HR department…

For those who may not realise it, human resources or HR departments are becoming an endangered species. Cynics might say that’s a good thing — that without them, far fewer people would lose their jobs.

The cynics would be wrong, of course. A professionally run HR department works to the benefit of organisations and employees, helping match available skills to the demands of the business. Done well, training and recruitment requirements are anticipated so that existing staff can be deployed where the organisation needs them to best satisfy its customers.

HR departments themselves are undergoing the same sort of redeployment. In response to a variety of factors — competition for workplace skills, a recognition of the strategic importance of recruitment and retention and different expectations of a new generation of employees — the HR role is being recast as human capital management (HCM).

This has been happening over the past three or four years and is reflected in new job titles such as HCM practice lead, my position at NTT DATA.

How did we get here, though? It’s interesting to trace the history of employee management and to see how the changes it has gone through line up with the broader transformation of business. Remember when organisations had personnel departments? Typically, they were managed by starchy, senior figures who had the key to the payroll and kept the records of holidays used and owed. It was worth staying on their good side to give yourself the best chance of getting days off when you wanted them and to help you advance through the ranks.

Personnel departments were eventually equipped with payroll systems to manage the regular pay run and record staff hours and leave entitlements. They were infamously error-prone, because of clunky design and the failings of the data inputters.

Gradually, as organisations modernised and the dynamics of the workforce changed, personnel departments were made redundant. HR departments, with a broader range of responsibilities, took their place. As the name implied, HR’s view of employees was that they were a resource to be managed, making recruitment and training, for instance, important new functions.

The HR department, and its management systems, fitted into organisations that were largely outward-looking — facing customers. Over the past couple of decades, the systems for ensuring customers received products and services that satisfied them and kept them coming back for more have been refined.

The increased capabilities of these systems — aimed at making supply chains more efficient, improving financial reporting and sharpening up marketing — have been driven from within organisations. The major software vendors have had a big hand in this, adding functionality to their systems to exploit more powerful hardware, and extending them to make use of the internet and the cloud.

In the past half-decade, however, the impetus has shifted as consumers have taken to social media. True to their name, social media platforms initially became established in the social sphere.

But it wasn’t long before businesses realised this was a dynamic new channel of communications with customers, making integration with legacy systems a priority. The payback was getting customers into a closer embrace — being able to listen in on their likes and dislikes and dampen down criticism before reputational damage was inflicted — and the collection of troves of data.

So how does HR, essentially a function that operates within an organisation’s confines, fit into the picture? As already noted, organisations are ditching HR in favour of HCM, for a combination of reasons that includes elevation of people management to strategic importance, advances in software functionality and usability and the employment expectations of millennials, the latest generation to enter the workforce.

Coincidentally — or not — these are variations of the same factors that have reshaped business systems. For instance, to be effective recruiters and retainers of staff, organisations need to tap into employee networks through platforms such as LinkedIn. They need to provide employees with tools for collaboration; and those tools need to have the ease-of-use of consumer-grade software.

Boiled down, what this means is that organisations are moving beyond seeing HR management as a series of back-office processes to it being integral to business success. As that shift has occurred, HCM directors are taking a seat at the board table.

To support them, they are looking for systems that manage the organisation’s talent so the right people with the right skills are in the right jobs. Along with that goes succession planning, so new people can be slotted in when key employees depart.

At NTT DATA, we see the evidence of this change when we speak to customers about SuccessFactors, SAP’s cloud-based HCM suite. Workflow automation, which has been HR’s preoccupation until recent times, is no longer top of the customer wish list. What they increasingly want are tools for ensuring the skills of their people are aligned with their business objectives.

One customer, for instance, has implemented and speaks highly of the SuccessFactors ‘Performance and Goals’ module, which provides its managers with a visual online tool that makes it easy to see which team members are working on what goals and how they’re progressing. Effectively it has automated and brought new value to the performance review process, taking it from being an arduous once-a-year distraction to something that is live year round and is useful both for managers and employees.

Combined with the ‘Compensation’ module, that organisation has now embedded a performance-based pay culture that doesn’t require a remuneration team having to pore over spreadsheets to analyse annual performance data.

Contrary, perhaps, to what might be expected of the millennial cohort is their eagerness for the kind of performance feedback inherent in SuccessFactors. At the same time, they have expectations of enjoying the same ease-of-use with business systems as they’re used to from the consumer applications they’ve grown up with.

And the generation that cut its teeth on social media will find another reason to like SuccessFactors in SAP Jam, a collaboration module that deploys Facebook-like interaction to work ends.

All of which doesn’t quite spell HR’s demise, but takes it to a new level.

ARTICLE SUPPLIED BY:

NTT Data Business SolutionsMark Wade is HCM practice lead at SAP systems implementer NTT DATA Business Solutions in Brisbane.
NTT DATA Business Solutions also has Australian offices in Sydney, Canberra, Melbourne and Perth.